Political Context

After 5 years of political stalemate and a mediation process led by the Southern African Development Community (SADC), presidential and legislative elections took place in Madagascar at the end of 2013. Mr. Hery Rajaonarimampianina was elected president and took office on January 25, 2014. Over the past 18 months, there was one government re-shuffle in January 2015 and a process of national reconciliation was initiated under the leadership of the president with the support of the Council of Christian Churches (FFKM).  A conference organized by the FFKM developed a set of recommendations, including a call for the dissolution of some of the state institutions. These proposals fueled tensions between the executive and legislative branches, leading the National Assembly to call for the impeachment of the president and the dismissal of the government. Both motions failed but tensions remain.

Municipal elections aimed at picking mayors and municipal councilmen/women for 1,693 municipalities took place on July 31, 2015, marking the achievement of another milestone of the SADC roadmap. The participation rate, around 30% at the national level, was one of the lowest ever seen in Madagascar. The president’s party, New Forces for Madagascar (HVM), won mayoral seats in 62% of the municipalities, with the other large parties (the MAPAR, chaired by former president of the transition Rajoelina, and the TIM, led by former President Marc Ravalomanan) won in several of the main cities.

The Government of Madagascar has made the “fight against poverty through inclusive growth” its main objective and has developed a strategy centered on three pillars: improving governance, promoting economic recovery, and expanding access to basic social services. This strategy has been outlined in the Programme Général de l’Etat (PGE) and translated into a 2015-2019 National Development Program (Programme national de développement or PND) with an implementation plan.

Many international partners, who had not recognized the transitional government that came to power in 2009 through unconstitutional means, have normalized their relations with Madagascar in light of the last presidential elections.

Economic Overview

The latest economic update published by the World Bank office reveals a slow economic recovery that is reflected in the decline of new business creation, job creation, and consumption of petroleum products. Catastrophic meteorological conditions have also taken a toll on the economy, resulting in higher inflation and a reduction of household purchasing power.

The ariary, Madagascar’s local currency, depreciated strongly in March against the US dollar, after being stable since mid-December 2014.  Madagascar’s trade deficit narrowed and the import value decreased by 17% in the first quarter of 2015 compared to the same period in 2014, due to the decline in international energy prices and a reduction in rice imports.  The export value increased by 12%, thanks to the volume of nickel and cobalt exports which offset lower prices and more favorable prices and production of cloves and vanilla. The performance of these products more than compensated for the decline in export values of shrimps, tuna and textile, the mainstay of the free economic zone (Zone franche).

The country continues to rank poorly on the ease of doing business index: 163rd out of 189 countries in World Bank Doing Business 2015 report. The Government has set a goal to improve its performance and has identified a series of improvements to be adopted over the next 18 months.

GDP growth is estimated at 3.4% in 2015 (3.3%  in 2014), mainly driven by the extractive industry and the tertiary sector. Inflation was contained at 6% despite the gradual removal of subsidies on petroleum products.

Social Context

Madagascar ranked 155th out of 187 countries in the United Nations 2014 Human Development Report and the country will not reach the United Nations Millennium Development Goals (MDG) by 2015. In particular, the MDGs for child mortality, primary education net enrollment and completion rates, and especially the eradication of extreme poverty, which in 2007 was deemed potentially achievable, can no longer be achieved.

Madagascar is also highly vulnerable to natural disasters—including cyclones, droughts and flooding. It is estimated that one quarter of the population, or approximately five million people, currently live in zones at high risk of natural disasters.

Last Updated: Sep 23, 2015

World Bank Group Engagement in Madagascar

The World Bank has been partnering with Madagascar since September 1963.

The World Bank’s current portfolio in Madagascar is composed of nine investment operations with a total commitment of $532 million. Trade and competitiveness has the highest share in terms of commitment at 27%, followed by education at 20% and transport and information and communications technology at 15%.

In December 2014, the World Bank Group’s Board of Executive Directors approved a total of $95 million to support Madagascar’s efforts to improve public service delivery and boost key areas for job creation. The first operation, the Reengagement Development Policy Operation (RDPO) financed by a $45 million International Development Association (IDA) credit accompanies the country’s efforts to consolidate the return to constitutional order and will provide budget support to the government to improve the efficiency and transparency of public service delivery. The second operation is a $50 million IDA credit for the first phase of the Second Integrated Growth Poles and Corridor Program (PIC2) that will help increase economic opportunities and access to enabling infrastructure services in three regions.

In recent years, the World Bank has developed an outstanding program of analytical work and has notably completed a collection of 18 Policy Notes covering all sectors which puts together a wealth of knowledge accumulated by the Bank over the last decade of engagement in Madagascar. This collection was officially launched in May 2014. Each of these policy notes has been widely discussed with various stakeholders from the government, the private sector, civil society, and academia. In addition, the Bank has completed selected pieces of major sector work in areas such as political economy of governance and aid effectiveness, health and nutrition, urbanization, and agriculture marketing.

Last Updated: Sep 23, 2015

The World Bank Group’s assistance strategy aims to increase investments and growth as well as improve social indicators. Our program has been able to improve lives in the following ways:

  • Across the country, 5,550 community nutrition sites were established where over one million children under five (about one-third of all children are under five years old) are regularly weighed and mothers are counseled on the health of their children;
  • 100% increase in growth of the traffic at the southeast port of Ehoala, which is partially financed by the World Bank;
  • 60,000 people in Fort-Dauphin have now access to potable water;
  • 100,000 land certificates were delivered since 2006;
  • 400,000 people benefited from cash for work projects;
  • 114 rural health centers received electricity;
  • 2,280 kilometers of roads were rehabilitated from 2006 to 2011;
  • Rice productivity doubled in the zones where the World Bank is intervening;
  • 5,000 poor families representing 16,000 children received conditional cash transfer to support their health care and education;
  • An additional 10% of the population can now have access to mobile telephony through the installation of telecom towers in remote regions.

The World Bank and a large number of development partners have also worked together since 1990 to support Madagascar’s National Environmental Action Plan (NEAP). This plan was implemented in the form of a three-phase $400 million Environment Program (EP). The engagement has yielded substantive results, including among others:

  • 75% reduction in the rate of deforestation over the past 20 years;
  • Creation of 2.4 million hectares of national parks;
  • Sustainable management of 4.5 million hectares of landscapes, primarily by non-governmental organizations (NGOs).

Last Updated: Sep 23, 2015

Prior to the 2009-2013 political crises, external aid represented 40% of the government’s budget and 75% of public investments. Madagascar’s four biggest donors (the World Bank, the European Commission, the United States and the African Development Bank) accounted for about 80% of official aid to the island.

During the political crisis, most donors put on hold new commitments while continuing existing humanitarian programs that are being channeled through specialized agencies or non-governmental organizations (NGOs). In light of the recent political developments, all donors are now reconsidering their assistance programs to Madagascar, including through new commitments. After five years, donors sent a strong signal of support by restoring budget support in 2014 after the country returned to constitutional order.

Last Updated: Sep 23, 2015


Madagascar: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments